Wednesday, September 28

Eight charts that show us how China is doing

China’s growth prospects continue to be the hardest hit. The market continuously downgraded its growth outlook for the euro area during the month of November, while its growth outlook for China has fallen more than other regions in recent months.

In the past three months, China has produced 20% less steel than in the same period a year ago. November 2021 was the weakest November for Chinese steel production since 2016.

Growth has remained sluggish due to three main factors: tight Covid-19 restrictions, weak household confidence, and weak real estate.

Housing will go from being a major contributor to a major drag on economic growth in China. The graph shows the contribution of housing to China’s annual GDP growth.

And the fact is that the fall in housing prices in China only increases fears that there has been a large housing bubble, of which only Evergande is the tip of the iceberg.

But do not suffer because China has under its control the credit impulse and if it is necessary to lower rates – as it has done -, they will be lowered so that its citizens can consume again.

According to JP Morgan, the Chinese market is at a time that may take off in the coming months. The falls have led to a large market floor.

And it is that China has been the country that has had the worst performance in the financial markets, it is the worst data in the last 30 years. A drop of more than 20%.

And the question is. Time to go shopping in China? Well, as always, the bets are on the Asian country and continent in general, the Chinese government does not seem to want to stop its reforms so that China does not depend so much on the US capital markets, but the rate hike of the People’s Bank of China may corroborate that its economy continues to slow down and it is not known how far this could go.

Investors must be in China, the question is whether it is right now or wait … And that depends on your risk profile.

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